ACC 490 Final Exam Answers
ACC 490 Final Exam
1. An audit that involves obtaining and evaluating evidence about the efficiency and effectiveness of an entity’s operating activities in relation to specified objectives is a(n):
2. When providing audit services, the CPA is expected to be:
3. Which one of the following services is often performed on public companies’ interim financial statements and nonpublic companies’ annual financial statements?
4. In the standard audit report, the auditor’s opinion on fairness pertains:
5. Auditor liability under the 1933 Securities Act extends to the:
6. An auditor may be liable to a client for breach of contract under which of the following?
7. Which of the following would be an example of a foreseeable party?
8. Which of the following would not be considered an analytical procedure?
9. The subject of the auditing procedure observing is least likely to be:
10. An auditor can use computer audit software to do all of the following except:
11. The title of a certain working paper is “Proposed Adjusting Entries.” The use of the word “proposed” indicates that:
12. The importance of the accept/reject decision for a particular client is reflected in the inclusion of “acceptance and continuation of clients” as:
13. When considering whether to accept an engagement, the auditor should consider the implications for accepting the engagement if:
14. A typical engagement letter should contain the following comment: Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that:
15. Which of the following best describes the auditor’s responsibilities concerning related parties?
16. In planning the audit, the auditor should assess materiality at two levels:
17. Professional standards recognize that a misstatement that is quantitatively immaterial may be qualitatively material. In regard to these items, professional standards require the auditor to:
18. In general, as an account balance decreases, the amount of evidence required will:
19. Which of the key financial ratios below measures the impact of financing decisions on earnings?
20. The auditor has some control over:
21. Which of the following is an example of how an analytical procedure may be helpful in identifying accounts and assertions that are likely to contain misstatements?
22. If inherent risk is assessed as low, control risk is assessed as low and analytical procedures risk is very low, the acceptable levels of test of details risk would be:
23. The auditor has chosen the preliminary strategy of lower assessed control risk. Which of the following is not a validly specified component of this strategy?
24. In order to emphasize the importance of integrity and ethical values among all personnel or an organization, the CEO and other top managers should do all of the following except:
25. Management’s risk assessment should include the following special consideration of the risks that can arise from changed circumstances except:
26. Which of the following is not an example of incompatible duties?
27. When planning an audit of internal controls over financial reporting, the auditor needs a comprehensive knowledge of the company and its environment. This knowledge might include:
28. Which of the following tests of controls would be most effective in testing controls designed to prevent checks from being issued or recorded for the wrong amount?
29. “A significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected” is the definition of:
30. Which of the following statements is true about an auditor’s responsibility to communicate with respect to a public company’s internal controls?
31. The nature of tests of controls relates to the type of evidence obtained. Which of the following is not an example of a type of evidence relevant to tests of controls?
32. Who is responsible for establishing the process and controls for preparing accounting estimates?
33. Use of auditor judgment or of a risk matrix is necessary in revising planned detection risk whenever:
34. In practice, the use of analytical procedures has proven to be:
35. Tests of details of transactions generally use evidence from:
36. The balance sheet account Inventories is related to which one of the following income statement accounts?
37. The most common objective of PPS sampling plans is to:
38. The reliability factor is based on the risk of:
39. The greatest impact on audit efficiency comes from the risk(s) of:
40. The main disadvantage of nonstatistical over statistical sampling in substantive testing is the inability, when using nonstatistical sampling, to: